Correlation Between First and Naturhouse Health
Can any of the company-specific risk be diversified away by investing in both First and Naturhouse Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First and Naturhouse Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Class Metals and Naturhouse Health SA, you can compare the effects of market volatilities on First and Naturhouse Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First with a short position of Naturhouse Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of First and Naturhouse Health.
Diversification Opportunities for First and Naturhouse Health
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Naturhouse is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding First Class Metals and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health and First is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Class Metals are associated (or correlated) with Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of First i.e., First and Naturhouse Health go up and down completely randomly.
Pair Corralation between First and Naturhouse Health
Assuming the 90 days trading horizon First Class Metals is expected to under-perform the Naturhouse Health. In addition to that, First is 3.91 times more volatile than Naturhouse Health SA. It trades about -0.05 of its total potential returns per unit of risk. Naturhouse Health SA is currently generating about 0.04 per unit of volatility. If you would invest 153.00 in Naturhouse Health SA on December 11, 2024 and sell it today you would earn a total of 23.00 from holding Naturhouse Health SA or generate 15.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.71% |
| Values | Daily Returns |
First Class Metals vs. Naturhouse Health SA
Performance |
| Timeline |
| First Class Metals |
| Naturhouse Health |
First and Naturhouse Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First and Naturhouse Health
The main advantage of trading using opposite First and Naturhouse Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First position performs unexpectedly, Naturhouse Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Naturhouse Health will offset losses from the drop in Naturhouse Health's long position.The idea behind First Class Metals and Naturhouse Health SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Naturhouse Health vs. Supermarket Income REIT | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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